First capital raise: complete
Bakkt looks forward after a bellwether year
I am pleased to confirm that we have completed our first round of funding of $182.5 million from partners and investors who, like us, believe in the future of digital assets.
Our work today is centered on driving institutional access for digital assets, along with merchant and consumer uses, and we’re already expanding on this vision, collaborating with great companies like Starbucks in these efforts. We’ll share details as the New Year unfolds, but as our COO Adam White and I work through Bakkt’s 2019 objectives, we are focused on opportunities to provide new infrastructure, including the industry’s first institutional grade regulated exchange, clearing and warehousing services for physical delivery and storage.
To that end, our team has been working closely with the Commodity Futures Trading Commission for the better part of 2018. At an industry level, regulatory approval for physically delivered and warehoused bitcoin will establish and amplify the voice of U.S. authorities as the digital asset market evolves globally. We have filed our applications and the timing for approval is now based on the regulatory review process. You may have seen the recent Wall Street Journal article — “First Futures Contract to Pay Out in Bitcoin Poised for Green Light” — noting Bakkt’s ongoing work with the CFTC. Clearing firms and customers have continued to join us as we work toward CFTC approval. We made great progress in December, and we’ll continue to onboard customers as we await the ‘green light.’
We have worked to build new markets and products many times before. Those of us building Bakkt have earned our stripes by helping advance markets in once-nascent asset classes, from energy to credit derivatives and, now, bitcoin. The path to developing new markets is rarely linear: progress tends to modulate between innovation, dismissal, reinvention, and, finally, acceptance. Each step, whether part of discovery or adversity, ultimately strengthens the product. Twenty years ago, it was controversial to suggest that commodities or bonds could trade electronically on a screen, and many steps were required for that evolution to play out.
Notably, 2018 was the most active year for crypto in its brief ten-year history. This was evidenced by rising investment in distributed ledger technology and digital assets, as well as by blockchain network metrics such as daily bitcoin transaction value and active addresses. Yet, these milestones tend to be overshadowed by the more narrow focus on bitcoin’s price, which has been seen by some, as a proxy for the potential of the technology.
It’s worth noting that major technology shifts prior to 2000, such as the advent of cell phones in 1980’s and commercializing the internet in the 1990’s, didn’t develop with the scrutiny of real-time digital headlines and tweets. While access to information as technology innovation occurs is extremely valuable, the risk is a “marking to market” of innovations before they have a chance to mature. Few innovations reached their full potential in their first decade of development.
At Bakkt, we’re focused on the work required, both near- and long-term, to evolve the applications for digital assets. Market quality, regulation, scale, security and utility are critical for establishing a strong foundation where innovation can flourish. Our first step is to establish the trust and infrastructure that builds confidence and grows participation at the institutional and merchant level. This is work that needs to be done, and we are excited to be part of this effort on a global scale as 2019 begins.